Big drop in turnover for meeting rooms and conferences
The pace of establishing flexible workspaces has been very high in recent years. Even with good economic growth and increased employment, competition for members of such premises has been sharp. The market currently totals more than 40 different players.
More than 160 000 m² of flexible office space will be available at 31 December in Greater Oslo, broken down between almost 100 centres. The market is expanding both through the entry of new players and through the opening of new centres by existing participants. A growing number of landlords have woken up to the desire of tenants for flexibility and have established their own concepts. These currently account for almost 20 per cent of the market (measured by square metres).
Few centres are profitable at present. Occupancy is now 59 per cent after falling by five percentage points from January. More than 5 500 of 13 500 workplaces are thereby vacant today. The decline in occupancy primarily reflects fewer members. Supply has increased only minimally since the previous survey, since several new openings have been postponed and a couple of centres have closed.
The players themselves report that the average breakeven occupancy for the centres is 75 per cent. Occupancy must undoubtedly increase for operation to become commercially viable. Space corresponding to 1 150 workplaces has also been signed for already up to the end of 2020, with another 2 600 next year. Demand must thereby increase by at least 2 200 members up to 31 December 2021 to avoid a further fall in occupancy.
Source: UNIONMost of the players have lost turnover as a result of Covid-19, and only 17 per cent of the centres are unaffected. Roughly half of them believe it will take 18 months to get back to where they were when the lockdown began on 12 March. On average, the centres have lost 18 per cent of their budgeted turnover since then. Not surprisingly, meeting rooms and conferences have accounted for the biggest fall. Demand for hot desking has declined more than for fixed places, both because the players themselves have removed a number of places temporarily to meet infection prevention requirements, and because it is simpler for members to pull out of such commitments quickly. However, hot desking accounts on average for only 15 per cent of the office places.
Source: UNIONVirtually all the players we have talked to believe the market for flexible workspace will alter as a result of Covid-19, and many believe the change will be to the better. Increased demand for flexibility is highlighted as a positive factor. Flexible contracts make it easier to reduce or increase staffing. However, today’s position could also present challenges in that it is difficult to maintain space efficiency and events. In addition, this is a time when companies are shedding jobs.